The Labor Dept.'s Occupational Safety & Health Administration (OSHA) has opened an investigation into a whistleblower complaint against Wal-Mart Stores (WMT). OSHA sent a letter to Chalace Epley Lowry, the employee involved, saying the agency is "notifying the party named in the complaint about the filing of the complaint" and "conducting an investigation into your allegations," according to a copy of the letter reviewed by BusinessWeek.
BusinessWeek wrote in June about Lowry (BusinessWeek.com, 6/13/07), an administrative assistant in the company's communications department, after she reported what she believed could have been insider trading by a senior executive. The executive was quickly cleared. But in the process, Lowry's identity was revealed to the executive. This resulted in her having to look for another position within the company, with no guarantee that she would get one.
It's unclear how strong Lowry's OSHA complaint is since she ultimately did find another job within Wal-Mart's legal department (BusinessWeek.com, 10/16/07). She has decided to pursue her complaint with OSHA because she contends Wal-Mart broke its own promise of confidentiality by revealing her identity, which caused her three months of extreme stress as she looked for a new job. She says she has been diagnosed with stress-induced angina, has separated from her husband, and has had her house foreclosed. "Wal-Mart has been very careful about the way it's handled me—there's been no loss of wages and I haven't been demoted," says Lowry. "Still, I think that I did the right thing and they did me wrong by disclosing my identity."
Wal-Mart declined to comment for this story. In the past, the company has said it revealed Lowry's identity only after she agreed to the disclosure. (Lowry says she was never given a choice.) Wal-Mart also said it decided to move Lowry out of the communications department only because she asked for the change.
A Political Issue
The investigation comes amid a debate over the role of whistleblowers in American business. Many Democrats have argued that current whistleblower protection laws aren't strong enough, even in the wake of legislation passed after the accounting scandals at Enron and WorldCom. On Nov. 1, Representative Lynn Woolsey (D-Calif.) introduced a new proposal to strengthen and standardize the laws. "Employees who expose illegal practices or safety violations benefit us all," says Woolsey. "But when they blow the whistle, they are often retaliated against. They are demoted, lose their jobs, and are blacklisted."
Whistleblowers frequently do not fare well after reporting what they believe to be wrongdoing. OSHA administers whistleblower protections under the Sarbanes-Oxley Act, which was enacted July 30, 2002. In an article published in the latest issue of the William & Mary Law Review, Richard Moberly, an assistant professor of law at the University of Nebraska, writes that during the first three years, only 3.6% of the employees who filed Sarbanes-Oxley complaints with OSHA won. The agency fielded 491 employee complaints, resolved 361 of them, and only 13 times were the decisions in favor of the employees. "In the first three years after the statute's enactment, the act hasn't protected the vast majority of employees who filed a Sarbanes-Oxley retaliation claim," says Moberly.
OSHA's own, more up-to-date figures show somewhat better results. The agency says that from 2002 through Sept. 30, 2007, a total of 1,059 employees filed whistleblower complaints. Of the 1,032 cases handled so far, 728 complaints were dismissed and 138 were withdrawn. OSHA found 165 complaints, or 16%, in favor of the employee, of which 148 were settled and issued orders in 17 cases.
Lowry made her controversial complaint last spring when Mona Williams, Wal-Mart's vice-president for corporate communications, had asked her to make digital copies and send some papers that Lowry thought were stock-related. A few days later, Lowry found out that Wal-Mart was planning a $15 billion stock buyback, and she worried that Williams might have traded on insider information by exercising her stock options. Lowry was prompted to file her complaint with the company's ethics department, in part because of an orientation session she had when she started at Wal-Mart in January that emphasized corporate ethics.
Wal-Mart has said its ethics office investigated the matter and Williams was cleared the same day the complaint was filed. A spokesman for the company said in June that Lowry mistook a deferred compensation form for an options exercise request. Soon after she filed the complaint, however, Lowry's identity as the whistleblower was disclosed to Williams—the development now most in dispute. At that time, a distressed Lowry said it was impossible to remain in the communications department since Williams was effectively her boss, so she asked for a transfer.
Lowry says she should have cause for action because the company disclosed her identity, a potential form of retaliation. But that argument hasn't been tested yet, says Michael Kohn, general counsel at the National Whistleblower Center, a Washington (D.C.) group that reviews laws to ensure proper protection for whistleblowers.
Bryan Little, deputy assistant secretary at OSHA, declined to comment on the specifics of this case. However, he says: "If a person engages in an activity protected by the law, and if his or her employer takes an adverse employment action such as firing, demoting, transferring, or other adverse action and there is a nexus between the protected activity and the adverse action, retaliation may have occurred."